Mick Hartley

A phrase which recurs regularly whenever I think of the EU is: an idea whose time has gone. Now, via Belmont Club, there’s an interesting talk by Niall Ferguson titled “The End of Europe?”.

I want to try to suggest to you that the end of Europe is not merely an economic phenomenon but will in fact prove to be a cultural phenomenon. Europe will turn out to be not an empire in the sense that I think the United States is today–that is to say, an expansive geopolitical entity–not a rival or a competitor or a counterweight to the United States, but almost its antithesis, something that is drawing political energies into it, that is perhaps even being colonized by exogenous forces. […]

When we look closely at the way in which the European Union is evolving and try to set its evolution in some kind of historical perspective, I believe it becomes apparent that, far from approaching a kind of parity with the United States, whether in economic and cultural and political or in international terms, in reality the European Union is an entity on the brink of decline and perhaps ultimately even of dissolution.

Now, for the avoidance of doubt, I’m not saying that the European Union will disappear as an institution in our lifetimes. Institutions, in Europe particularly, tend not to disappear. They just decline in their power. Like, for example, today’s Organization of Economic Cooperation and Development–once the prototype of a far larger post-Marshall Aid European union, today a harmless agency for gathering data and producing economic reports. And ladies and gentlemen, Europe is littered with such agencies, which once embodied grandiose plans–think, for example, of the Bank for International Settlements or the International Labor Organization. There’s scarcely a European capital without the relic of some past plan for great greater European integration.

My suggestion is not that the European Union will vanish, but simply that its institutions are in danger of atrophying and that it, too, may one day be no more than a humble data-gathering agency with expensive but impotent offices in the city of Brussels and elsewhere.

Ferguson has three lines of argument: economic, historic/functional, and cultural. Economically the case is straightforward enough: Germany was always the economic powerhouse for Europe, but is now under-performing:

The key point about economic under-performance in Europe is that it is principally, or at least predominantly, a German story. It is richly ironic that only 20 years ago scholars were warning that Germany–along, of course, with Japan–was going to surpass the United States among the world’s biggest economies. In truth, those of us who were living in Germany in the 1980s could see an impending economic crisis in that country, a crisis that German reunification temporarily postponed in an orgy of deficit finance and subsidized consumption.

Now we see the reality. There is a profound problem in the German economy that would be there whether the Bundesbank was still in charge of monetary policy in that country or not. The problem is worsened by the fact that, under the ECB, interest rates in Germany are probably around 100 basis points higher than they should be. And given that the German economy is roughly a third of the economy of the euro zone, an unhealthy Germany is an unhealthy European economy.

Historically he makes a very interesting case for reviewing the early post-WW2 days:

There’s been some very good work on the history of European integration done recently. It hasn’t been, I think, widely enough understood or received. Perhaps the most interesting work has been produced by the venerable British economic historian Alan Milward, but it’s also been complemented by the young Harvard historian Andrew Moravcsik. Between them, working independently, they’ve arrived at a new interpretation–and I think it deserves to be called a new interpretation–of why European integration happened at all after the Second World War.

Instead of the conventional view that a few saintly figures, like Jean Monnet, realized a vision of European integration to prevent the recurrence of war in Europe and generally make everybody happier and better off, they argue that, beginning with the negotiations that produced the European Coal and Steel Community, the nation states of Western Europe made very limited concessions of sovereignty in the pursuit of the national economic interest—or, to be quite specific, in pursuit of the interests of well represented economic groups within their societies, principally heavy industry and small agriculture.

If one understands the process of European integration in these terms–essentially an economically driven set of deals between still largely sovereign nation states–one thing becomes abundantly clear. And that is, ladies and gentlemen, that from the very outset this process relied on what I rather crudely called a moment ago “German gravy.” It was the Germans who, from the very word go, were prepared to subsidize the other parties in the process of European integration.

To give you just one example: The fundamental bottom line of the coal and steel community was that German taxpayers would prop up the inefficient coal mines of Belgium at the cost of hundreds of thousands of marks. In the same way, it was German taxpayers who paid the development aid to the French colonial empire, aid that was an integral part of the Treaty of Rome.

It’s often forgotten that where the British saw a choice between empire and Europe, and dithered and hesitated about that choice, the French did what I always do whenever I see a choice. They said, “We’ll have both, please.” Not only did the French seek to retain their African empire and what was left of their Asian empire within the structures of the emerging European community, but, with a brilliant stroke of diplomacy, they insisted that the other five members that signed the Treaty of Rome should subsidize their colonies. And so it was that, in an extraordinary deal, Konrad Adenauer agreed to payments to French colonies that came very largely from German taxpayers. Likewise, the Common Agricultural Policy, which became the single largest item in the budget of the European community, was from its very inception underwritten by net contributions from German taxpayers. That was how it worked.

If you add up all the–to use the technical term–unrequited transfers that Germany has paid through the European budget since its inception, one of the most striking facts that I can offer you is that the total exceeds the amount that Germany was asked to pay in reparations after the First World War. It is more than 132 billion marks, the sum that the Germans in the 1920s insisted would bankrupt them if they paid it. Well, they finally did pay it. They paid it not as reparations, but as net contributions to the European budget.

The German gravy train has been subsidising the rest of the EU, principally France, “but there ain’t no gravy anymore”.

The final part of Ferguson’s thesis is cultural, and rehashes the familiar arguments about demographic decline and the pressure of an expanding Muslim population. He wonders if Gibbon’s vision of what might have happened if the Muslims had not been defeated in the eighth century at the battle of Poitiers, with the Koran being taught at Oxford, might yet come to pass, and mentions the opening next year of a centre for Islamic studies in Oxford. I wonder to what extent this is Ferguson pandering to a US audience: the opening of an Islamic centre in Oxford is hardly the end of Western Civilisation as we know it. He also brings in a familiar trope in US circles – the decadence of Europe – quoting figures for the decline of church-going. Again I’m unhappy with the implications of this: that the only defence against Muslim expansionism is Christianity. What happened to the whole Enlightenment project? I thought that was what we’re fighting for.

Also it’s not clear in this context to what extent Britain is included in Europe. This is a general problem I have with US discussions on Europe. I tend to think not on the whole, but it does, in the standard wisdom, reflect a problem we have with our definition of ourselves. Personally I don’t really see the problem. Where are we? We’re between Europe and the US geographically, politically, and culturally. What’s the problem with that? Why do we have to choose?